The United States faces a number of serious fiscal and economic challenges. Federal budget deficits are projected for the foreseeable future, the economy remains weak, Social Security faces long-term financing concerns, health care spending is growing faster than the economy, tax policy is at a major crossroads, and our national debt continues to rise. Inattention to the ballooning national debt threatens to undermine the economy and our competitiveness, and could lead to a serious fiscal crisis.
Our country’s debt trajectory is unsustainable. Historically, debt held by the public has averaged less than 40 percent of GDP since 1970. Today’s debt is roughly 70 percent of GDP and rising fast, particularly due to the retirement of the baby boom population and rapid health care cost growth. The United States is currently at a crossroads, where fundamental but thoughtful changes can be made now, or else far more painful ones can be forced upon us down the road.
Our leaders will have to take concrete steps to confront these challenges, including raising additional revenues, reducing spending, or some combination of the two. The sooner decisions are made, the better, because they can be phased in more gradually, allowing more time for the economy to recover and the public to adjust, all while providing more stability in the economy. The presidential election season offers the candidates a unique opportunity for leadership in advocating solutions to put our nation on a path to fiscal sustainability.
U.S. Budget Watch seeks to bring attention to the fiscal consequences of presidential candidates’ tax and spending policies and to help the public become informed about these issues. Primary Numbers: The GOP Candidates and the National Debt analyzes the debt impacts of campaign proposals by the four major Republican presidential candidates: Speaker Newt Gingrich, Congressman Ron Paul, Governor Mitt Romney, and Senator Rick Santorum. Our previous publication, The 12 Principles of Fiscal Responsibility for the 2012 Campaign, can be found at https://crfb.org/document/12-principles-fiscal-responsibility-2012-campaign. This edition’s focus on the four Republican candidates reflects the current public attention to the Republican primary contest. President Obama’s proposals will be included and evaluated under the same method in future analyses.
Each of these candidates has a detailed, albeit still incomplete, set of proposals to reduce both taxes and spending. This report reviews those policy proposals and evaluates their impact on the federal debt. Specifically, we have estimated the debt impact of each policy from the beginning of the next presidential term through the end of fiscal year 2021. Where available, we base our estimates on those of official sources such as the Congressional Budget Office or respected outside groups like the Tax Policy Center. We also rely on estimates from the campaigns themselves, media reports, as well as those produced internally. For each candidate, we provide a low-debt, intermediate-debt, and high-debt scenario to reflect multiple estimates for certain policies. In general, we provide multiple estimates for one of three reasons: 1) the level of specificity does not allow us to confidently identify what is being cut or increased; 2) the score provided by the candidate or campaign differs from a more official third-party score; or 3) policies do not contain sufficient detail to estimate their effects without further assumptions.
Our methodology section includes a full explanation of these scenarios. Generally speaking, the low-debt scenario gives credit for vague changes to top line numbers (for example, cutting total spending by a percentage), the intermediate-debt scenario gives credit for non-specified changes to certain parts of the budget (for example, reducing non-defense discretionary spending by a percentage), while the high-debt scenario credits only savings from specifically identified policy changes. When the candidate or campaign provides an estimate which differs from an official score, we rely on the campaign estimate for the low-debt scenario and the official score in other cases. And finally, when precise parameters of a policy are not offered (for example, a candidate promises to “phase in” a policy but does not specify the time horizon) we generally estimate three different versions of the policy and distribute them based on their debt impact.
Importantly, our estimates are based on our understanding of the candidates’ policy proposals and details to date, and do not represent a final analysis. These findings have not been endorsed by the campaigns or the candidates. As candidates continue to add to and clarify their policy proposals, we will continue to update our estimates.
U.S. Budget Watch is designed to inform the public and is not intended to express a view for or against any candidate or any specific policy proposal. Candidates’ proposals should be evaluated on a broad array of policy perspectives, including but certainly not limited to their approaches on deficits and debt.
Click here for an addendum on Governor Romney's 2/22 tax plan.
